KUALA LUMPUR: The Malaysian Aviation Commission (MavCom) forecasts passenger traffic in 2020 to grow between 5% and 6% next year or to between 114.9 million and 116.0 million passengers.
In its fifth edition of its bi-annual Industry Report, Waypoint released on Tuesday, MavCom said the growth would be driven by Visit Malaysia 2020 and a 3.2% year-on-year increase in domestic seat capacity growth.
“The forecasted growth in 2020 follows MavCom’s revised 2019 passenger traffic forecast to between 109.1 million and 109.7 million, being a growth of between 6.4% and 7% YoY, while actual traffic growth for 1H19 was 5.2% YoY, ” it said.
The report offers an overview of the performance of the Malaysian aviation sector for the first half of 2019 (1H19) as well as prospects for 2020.
In 1H19, Malaysia recorded 4.8 million tourist arrivals by air, resulting in an 8.8% growth YoY.
MavCom said this was higher than the growth recorded for total tourist arrivals by all modes of transport of 4.9% YoY, resulting in arrivals of 13.4 million.
“This increase is mainly as a result of higher tourist arrivals from Indonesia, China, and Thailand, which offset the decline in tourist arrivals from Singapore and Brunei. Collectively, these five countries constituted 78% of the total tourist arrivals in 1H19, ” it said.
Despite the increase in tourist arrivals by air, Malaysian carriers recorded lower operating margins in the first half.
Avverage operating profit margin of Malaysian carriers fell to 0.3% YoY on the back of rising costs, it said.
“While average cost per available seat kilometre (CASK) saw a 5.9% YoY increase to 17.9 sen, revenue per available seat kilometre (RASK) decreased by 2.2% to 15.9 sen, ” it said.
It pointed out the greater RASK-CASK negative spread in 1H19 compared to a year ago, reflected the decreasing profitability of Malaysian carriers and a challenging operating environment in Malaysia.
Stronger domestic passenger traffic growth relative to international passenger traffic growth could also influence aerodrome operators’ earnings in 2020 as passengers incur a lower passenger service charge for domestic travel.
Next year, seat capacity by Malaysian carriers was expected to grow by 2% YoY compared with 4.3% on-year in 2019.
Subsequently, average fares by the carriers are forecasted to remain flat or rise slightly due to slower growth in capacity, which may also enable local carriers to improve their load factors.
MavCom executive chairman Dr Nungsari Ahmad Radhi said the commission noted the growing development of alternative airport hubs such as Johor Bahru, Kuching, and Kota Kinabalu in 2019 as carriers allocate more seats to these airports, which enables a wider choice of domestic destinations.
“Greater allocation of seats for these airports supported the domestic-led growth in 2019 and is expected to persist in 2020, where routes within Sabah and Sarawak will experience the highest growth, ” he said.
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